EU trade policy

The Fair Trade movement believes in the role of quality trade to lift

marginalised producers and workers in the South out of poverty.

However, EU trade policy is seen by the EU Member States and

European Commission almost exclusively as a tool to open markets

for European companies. In the wake of the fi nancial and economic

crisis in Europe, EU trade policy has become even more aggres-

sive than before as the EU expects that in the near future 90% of

world-wide growth is expected to be generated outside Europe1.

In exchange for increased market access by non-EU companies

to the EU market (which often benefi ts the large companies run by

their economic elites), these trade deals not only aim at lowering

tariffs for European products and services, they also often impose

conditions on the EU trading partners.

For example, the European Commission sees Free Trade Agree-

ments (FTAs) as an opportunity to prevent its trading partners giving

preference to local small producers in their Public Procurement

policies, like programmes to provide food in schools. This can

affect whether developing countries can decide for themselves

what public policies they wish to put in place to achieve their

sustainable development objectives, such as programmes to

provide good in schools.

EU development policy

Though in the past small producers have been neglected as impor-

tant actors in development by decision makers, recently the trend

is turning for the better. For example, there is a growing recognition

of the important role played by small producers in ensuring food

security. The current EU development strategy (also known as

“Agenda for Change”) clearly states the importance of support-

ing small producers and rural livelihoods, as well as developing

the local private sector. This is good news as it means that any

1 European Commission: Commission contribution to the European Council on Trade, Growth and Jobs. Available from http://trade.ec.europa.eu/doclib/docs/2013/april/tradoc_151052.pdf

future programming and aid allocation of the EU needs to take

into account and prioritise activities that favour small producers.

At the same time, this “Agenda for Change” also implies that de-

veloping countries (in particular large emerging economies such as

China, Brazil and India) should see a drastic reduction of EU aid, given

their good performance in economic indicators. While this reasoning

may seem logical initially, these countries are very unequal societies.

72 per cent of the world’s poor, also known as the “new bottom

billion” live not in poor countries but in middle-income countries2.

Unfortunately, a fundamental problem with EU policy is the lack of

Policy Coherence for Development as, despite the noble goals of

the EU development cooperation, other policy areas (e.g. trade,

agriculture policy) largely ignore their impact on development.

EU Public Procurement rules

The current EU Public Procurement Directives3, adopted back in

2004, are not explicit about the introduction of social criteria. This

created confusion and legal uncertainty about how to support Fair

Trade in public procurement. This led even to some court cases at

national level and a case at the European Court of Justice4. The

outcome of the European Court of Justice ruling is very favourable

for the introduction of Fair Trade criteria in public contracts since

the Court clearly accepted this possibility.

The EU Public Procurement Directives are currently being revised

and expected to be adopted early 2014. The new EU rules are

expected to allow public authorities to refer to production process

(e.g. Fair Trade), as well as to include sustainability criteria during

various stages of the procurement process. This favourable legal

framework will encourage public authorities to continue supporting

Fair Trade through responsible procurement choices.

2 More information from: http://www.ids.ac.uk/project/the-new-bottom-billion3 The legal framework for Public Procurement in the European Union is provided

by Directives 2004/17/EC coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors, and 2004/18/EC on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts).

4 C-368/10 also known as “North Holland” case

4. Analysis of current EU policies on Fair Trade and Trade Justice

Regulation of supply chains

The EU has so far not regulated the issue of Business-to-Business

Unfair Trading Practices. However, the voice of farmers (in particular

European farmers) have been loud and clear in showing they suffer

the consequences of such Unfair Trading Practices.

The European Commission is expected to take by early 2014 a

decision on what approach to follow. Whatever the approach taken,

it is important that whatever system is put in place is built in a way

that also allows producers in non-EU countries to be protected

against Unfair Trading Practices when they export to the EU.

In parallel, the main angle of EU competition policy so far is ensuring

EU consumers get access to diverse and cheap products and

services. However, this understanding of the added-value of com-

petition law implies that consumers are only “bargain hunters” as if

the only thing that mattered to them was the price of products and

they did not care about the conditions of producers and workers.

Sustainable Production

and Consumption

The European Union gave itself in 2012 a Sustainable Consumption

and Production and Sustainable Industrial Policy Action Plan5. In

this context, a series of initiatives have been developed, focusing

on the environmental impacts of products, disregarding the eco-

nomic and social components of sustainability.

5 The 2012 EU Sustainable Consumption and Production and Sustainable Industrial Policy Action Plan is available fromhttp://ec.europa.eu/environment/eussd/escp_en.htm

Fair Trade has been used as an example and best practices in

different areas of the EU Sustainable Production and Consumption

(SCP) Action Plan but so far the EC failed to take the next logical

step and coordinate Fair Trade policies, mainstreaming Fair Trade

throughout EU policy.

EU policies on Fair Trade

Despite the increasing support of Fair Trade by EU citizens, the

rapid growth of Fair Trade sales in the last years, strong political

support from the European Parliament, Committee of the Regions,

and in a large number of EU Member States, there is no real

European strategy to promote Fair Trade.

The policy of the current European Commissioner for Trade defi nes

Fair Trade as nothing more than as a consumer-assurance sustaina-

bility scheme and seems unwilling to give Fair Trade products more

favourable conditions than “business as usual”. However, given

the fact that Fair Trade concept offers substantial additional value

directly supporting the EU’s commitment to sustainable develop-

ment this is confusing apples with pears. Following the example of

the EU’s coordinated strategy in support of organic agriculture as

alternative farming approach, the European Union should, next to

its “conventional trade policy”, put in place a coordinated approach

to promote Fair Trade; as an alternative way to understand trade,

which contributes to sustainable development and ensures that

trade does work for marginalised producers and workers.

This document has been produced with the fi nancial assistance of the European Union. The contents of this document are the sole responsibility of the Fair Trade Advocacy Offi ce and can under no circumstances be regarded as refl ecting the position of the European Union.